Boyd Gaming Corporation

Good afternoon, ladies and gentlemen. Thank you for attending the Boyd Gaming third quarter 2021 conference call. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I will now pass the conference over to your host, Josh Herschenberg, Executive Vice President and Chief Financial Officer with Boyd Gaming. You may proceed.

Thank you, operator. Good afternoon, everyone, and welcome to our third quarter conference call. Joining me on the call this afternoon is Keith Smith, our President and Chief Executive Officer. Our comments today will include statements that are forward-looking statements within the Private Securities Litigation Reform Act. All forward-looking statements in our comments are as of today's date, and we undertake no obligation to update or revise the forward-looking statements. Actual results may differ materially from those projected in any forward-looking statements. There are certain risks and uncertainties, including those disclosed in our filings with the SEC, that may impact our results. During our call today, we will make reference to non-GAAP financial measures. For complete reconciliation of historical non-GAAP to GAAP financial measures, please refer to our earnings press release and our Form 8K, furnished to the SEC today, and both of which are available at investors.boydgaming.com. We do not provide a reconciliation of forward-looking non-GAAP financial measures due to our inability to protect special charges and certain expenses. Today's call is also being webcast live at BoydGaming.com and will be available for replay in the investor relations section of our website shortly after the completion of this call. So with that, I would now like to turn the call over to Keith Smith. Keith?

Thanks, Josh, and good afternoon, everyone. The third quarter was another outstanding quarter for our company as we achieved our fifth straight quarter of exceptional results since reopening our properties last spring. This sustained level of strong performance is the direct result of the fundamental changes we made to our operating philosophy last year. Upon reopening, we sharpened our focus on driving play from our most loyal guests. We streamlined our cost structure and we adopted a more efficient approach to doing business that touched every part of our operations. Our record third quarter performance and our results over each of the last five quarters are tributes to the transformation of our business model and the disciplined approach we have taken to operating our business. These exceptional results have significantly enhanced our free cash flow and strengthened our balance sheet with our leverage declining to 2.75 times at the end of the third quarter. As a result of our strong financial position and our prospects for continued growth, our Board of Directors has authorized a share repurchase program of $300 million, allowing us to return a portion of our robust free cash flow to our shareholders. So let's review the operating performance that helped make this possible. For the second straight quarter, revenues exceeded both 2019 and 2020 levels, setting a new third quarter record. Strong flow through resulted in an adjusted EBITDA of more than $340 million, also a third quarter record. Our quarterly EBITDA was 42% higher than the third quarter of 2020 and 60% higher than the third quarter of 2019. And our company-wide operating margins exceeded 40% for the second straight quarter. Our third quarter margin grew nearly 400 basis points over last year's record and is up more than 1400 basis points from 2019. Every segment of our business contributed to this outstanding performance. as we set new third-quarter EBITDA records in each of our three operating segments. In a Las Vegas local segment, revenues grew 35% over last year, and EBITDA was up almost 60%. Operating margins exceeded 54% and have been at or above the 50% mark every quarter this year. In downtown Las Vegas, we posted record third-quarter EBITDA of $13.2 million on margins of 31%. This is a substantial improvement over the EBITDA loss we reported a year ago and is up double digits over our record third quarter 2019 results. And in our Midwest and South segment, we set new third quarter records for both revenues and EBITDA as EBITDA grew 22% over prior year and 42% from 2019. This strong performance was broad-based as 11 of our 17 regional properties set new EBITDA records for the third quarter. Nationwide, of the 26 properties that were opened the entire quarter, 21 grew EBITDA by double digits over last year, with 18 setting new third-quarter EBITDA records. As I mentioned earlier, the record levels of revenues, EBITDA, and margins we have produced throughout 2021 are the result of deliberate actions we have taken since reopening last year, including focusing on the right customer, transforming our operating model, and implementing new capabilities and refinements throughout our business. and we are continuing to implement initiatives and technologies to enhance customer convenience, build loyalty, streamline processes, and reinforce our operating efficiency. An example of this is our Boyd Pay cashless technology, which is now live at 11 properties in four states. While initially Boyd Pay was focused on our slot product, we are quickly expanding Boyd Pay's capabilities to other areas, both gaming and non-gaming. In the next several weeks, we will be expanding Boyd Pay to the majority of our restaurants in Las Vegas. In addition, we recently launched a field trial for Boyd Pay at Table Games in Nevada, with Pennsylvania soon to follow. Our goal is to create a tool that will make it easier for our guests to make wagers and pay for non-gaming amenities right from their smartphone. We are making excellent progress toward this objective and expect Boyd Pay will become available at every Boyd Gaming property next year, pending regulatory approvals. We're also using technology to create new revenue opportunities and enhance the guest experience in other ways as well. For example, in Nevada, we recently relaunched Boyd Sports, offering an unmatched selection of vetting opportunities through the most expansive wagering menu in the state. We are pleased with the customer reception so far, with strong increases in activity from both new and reactivated guests. Beyond these new initiatives, we also have additional organic growth opportunities available throughout our operations. Across the country, many of our hotels have been running below capacity since reopening due to a tight labor market. As a result, we have not been able to accommodate many rated customers who have established gaming histories with us. As the labor market normalizes, we will be able to bring more hotel rooms online, driving gaming revenue growth from these customer segments. In downtown Las Vegas, we anticipate continued growth as tourism throughout the city recovers and Hawaiian visitation improves. We also have opportunities for future growth in our midweek business and our meeting and convention business. Overall, we expect to see further recovery and visitation throughout our portfolio as restrictions are lifted, COVID numbers improve, and travel resumes. On top of our organic growth opportunities, we are well positioned for further gains in the digital space. We view online gaming and online casinos in particular as a strategic growth opportunity for our company. With gaming operations across 10 states and a strong player loyalty program, we have the foundation to build a robust digital complement to our land-based casino operations. Our iGaming operations are off to a good start in both Pennsylvania and New Jersey, where our Stardust-branded online casinos have delivered strong results since launching in April. Expanding our iGaming operations is a strategic priority for our company, and we will look to further build our online casino capabilities and geographic presence over time. In sports betting, our partnership with FanDuel continues to grow. Our current focus is Louisiana, where we are preparing to launch sports betting at our five properties in that state by year-end, pending regulatory approval. Once live, this will extend our partnership with FanDuel to six of our nine regional states. In all, We expect our digital operations, including sports, casino, and social casino, will generate more than $20 million in EBITDA this calendar year. Digital is a profitable business for us today, and it will be an increasingly important part of our overall strategy in the years ahead, generating incremental revenue and EBITDA for our company, expanding our customer base, and importantly, building loyalty among our guests by providing us another opportunity to engage with them. We also continue to benefit as a 5% equity partner in FanDuel's accelerating expansion across the country and their position as one of the leading online sports and casino operators in the country. Since our last call, FanDuel has launched new sports betting operations in Arizona and Connecticut and expects to go live in Maryland, Washington State, and Wyoming by the end of the year. Sports betting operations in 15 states by year end, FanDuel is a clear leader in the expansion of digital gaming and we are participating in its success as an equity owner and a partner. While the opportunity in digital is substantial, we also have strategic opportunities to further expand our traditional gaming operations. In Northern California, construction on the Wilton Ranch Area Tribe's Sky River Casino is progressing well. The steel structure was topped off last month, and we are quickly moving forward with both exterior and interior construction. This project remains on time and on budget, and we are on track to open Sky River early in the fourth quarter of next year. And in Louisiana, we continue to make progress on development plans for a new land-based facility at Treasure Chest Casino, featuring expanded gaming space and significantly upgraded non-gaming amenities. Treasure Chest has been a strong performer for years, and this project will allow us to further enhance a property that is already producing strong results. Before turning it over to Josh, I want to provide an update on our ESG initiative. Since issuing our first ESG report earlier this year, we have convened teams of corporate and property executives to focus on a number of strategic ESG initiatives, including reducing our water and energy consumption, lowering our carbon footprint, encouraging employee volunteerism and workplace giving, enhancing the diversity of our workforce, and refining our responsible gaming efforts. We look forward to providing you with an update on our progress in next year's ESG report. We also continue to support our communities during times of need, as we did after Hurricane Ida struck South Louisiana in late August. To assist our South Louisiana communities with their recovery effort, Boyd Gaming made a significant contribution to our partners at Second Harvest Food Bank, helping them provide much-needed food and water to thousands of local residents in the immediate aftermath of the storm. At the same time, we extended full pay and benefits to our team members at Treasure Chest and Amelia Bell while those properties were closed following the storm. We also provided immediate cash benefits to all of these employees, and we are providing additional relief as needed through the Boyd Gaming Team Member Crisis Fund. Giving back to our communities and being a responsible corporate citizen have always been core tenants of our company. We're proud to uphold that commitment after Hurricane Ida, and we will continue to honor that commitment as a central part of our company's ESG philosophy. In summary, After our fifth strong quarterly performance in a row, we have great confidence in our future and our ability to grow our business. Our restructured operating model and our tight focus on the right customer are delivering exceptional results. Companywide EBITDA has exceeded the billion-dollar mark in just nine months, with margins significantly higher than pre-closure levels. We are confident that this level of performance is sustainable and that we will maintain much of the margin improvements we have achieved over the last 18 months. Our free cash flow has more than doubled, and our balance sheet is the strongest it has ever been, giving our board the confidence to authorize a new share repurchase program. And we have opportunities for incremental growth ahead. As the pandemic fades, additional visitors will return to our properties. As the labor market normalizes, we will be able to bring more hotel rooms online, increasing our capacity to host profitable customers. and we will further leverage our nationwide portfolio, our extensive customer database, and our partnership with FanDuel to continue expanding our digital business. We are well positioned for the future, and while our recent success is a result of our transformed operating strategy, it is also a tribute to the strength of the entire Boyd Gaming team. Our team members are successfully executing the strategy that is creating these exceptional results. I cannot say enough about their dedication and effort over these past 15 months in dealing with the COVID pandemic and an uncertain environment. It is an honor to lead this team, and we look forward to continued growth and success in the months and years ahead. Thank you for your time this afternoon. I'd now like to turn the call over to Josh. Josh?

Thanks, Keith. Results for the third quarter and year to date have been truly outstanding. Our performance reflects a transformed operating philosophy that we implemented after reopening our properties in the third quarter of last year. focused on building loyalty and efficiently serving our core customer. This operating philosophy structurally changed how we execute our business, including reevaluating our approach to marketing, as well as scrutinizing every other facet of our operation. And as you have seen in our results, we have consistently executed this strategy for five quarters, generating revenues that are now surpassing 2019 levels with significantly higher EBITDA across our business. And as Keith mentioned, we are optimistic about our future, as we have multiple avenues for continued growth, as well as confidence that we will continue to operate at higher levels of margin. Today, we are financially a much stronger company than at any point in our history. Total EBITDA over the last 12 months surpasses $1.2 billion, and leverage at the end of the third quarter was 2.75 times and expected to further decline by year end. As a result of our strong operational performance, we are now generating robust levels of free cash flow, approaching $700 million over the past 12 months. To reflect their confidence in the company's future, our board authorized a $300 million share repurchase program. This amount is in addition to $61 million remaining from a prior approval. Given our sizable and growing free cash flow, we will also continue to invest in opportunities that generate high returns for our company. These growth opportunities will be balanced with returning capital to shareholders and maintaining current levels of leverage over the long term. Operator, that concludes our remarks, and we're now ready to take any questions.

Absolutely. We will now begin the QA session. If you would like to ask a question, please press star followed by one on your touchtone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, press star one. As a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly to allow questions to generate in queue. The first question is from the line of Carlos Centarelli with Deutsche Bank. You may proceed.

Hey, Keith and Josh, thank you. Josh, maybe this one's best for you. As you kind of think about, and I know Keith alluded to it in terms of bringing staffing back on to kind of better optimize the hotels and bring some of your rooms online and in your assets, when you think about kind of the magnitude of labor that returns, Relative to kind of what was what was extracted during the obviously during the pandemic. I think you guys had said in the past something about, you know, potentially bringing back about 20 percent of that cohort. Has that thinking changed at all as you guys have gone through and gotten more accustomed to operating with with kind of current levels and things like that? Or is that number perhaps exactly what you thought it would be?

Yeah, Carlo, so thank you for the question. I think ultimately, you know, our labor has been significantly reduced from a pre-COVID level. And I don't think that we've ever suggested that we're going to bring about 20% back. I think it was more in line with as we introduce amenities, we expect to bring some labor back within the operating environment. I think on the order of magnitude pre COVID we had something like 24 to 25,000 team members. Today we're operating at around 14,000 team members and it is the general expectation that we will add back team members overtime, but nowhere near the order of magnitude of the amount of staffing that's been reduced as a result of coming out of COVID. So we do expect some labor, you know, not on the order of magnitude of adding back 20%, however.

Yeah, I guess I was referring to 20% of the 10,000, so kind of a 14,000 to 15,000 number. Okay. Does that sound roughly appropriate?

Yes, I believe that remains in line with how we're thinking about our business going forward over the next several quarters.

Yeah. And Carlo, just importantly, and I think you alluded to this, that will come along with increased revenues as we are able to staff and occupy or open up more hotel rooms and open up more shifts at our restaurants and other things. And so it's not just a labor increase. It will come associated with revenues and profit.

Yes. Thank you, Keith. And for sure, I get that part. I guess that just a quick follow-up as pertains to the buyback authorization and in You guys have certainly done buybacks in the past. As you think about the growth opportunities, Kate, that you outlined, obviously, that are within the planning right now, including Treasure Chest and some other things that you mentioned, how are you balancing the buyback decision versus some of those ROI opportunities versus perhaps something outside of the realm of Boyd and that would be, you know, you think would be additive to the future of the company and how aggressive should we necessarily anticipate you will be with that, that authorization?

So I think the way we think about it is the $300 million was sized based on all the other things you mentioned. We took a look at, you know, the investments we need to make in our properties, things like treasure chest. We took a look at, as Josh indicated, maintaining leverage and, at around current levels or slightly lower. You know, we expect to be closer to two and a half at the end of the year and think that is, you know, where we want to run the business long term. And then, you know, that's basically putting all that in the hopper is how we size the $300 million. So you should expect that we will execute on the $300 million. And that, you know, when we're done with that, we'll take a look and see where we're at and see what our next step is. But we can continue to invest in our business, keep our leverage where it is, and execute on the $300 million. It is a balanced approach.

Great. Thank you very much, guys.

You're welcome. Thanks, Carla.

Thank you, Mr. Centarelli. The next question is from the line of Barry Jones, which you may proceed.

Hey, maybe just following up on the return capital question, how are you thinking about resuming the dividend here? What would you like to see first?

Well, obviously, our board, as we just announced, authorized the share repurchase. We believe that that is the most efficient and flexible way to return capital to our shareholders. And that was a decision that was made. If some other decision is made in the future, then we'll certainly report on it. But that's all we have to report for now.

Got it. Okay. Then can you talk a little bit about the promotional environment and how that's been trending across your markets and maybe specific to the Las Vegas locals market? I believe some competitors have talked more about targeting that customer. So curious what your forward expectations might be there.

Sure. It's a good question. So as we think about Las Vegas locals specifically, I would say that it hasn't significantly changed over the last quarter or two that, you know, the, our main competitor and the larger operators are being disciplined and kind of maintaining their focus. Some of the smaller operators, frankly, several quarters ago had fallen back to what I will call kind of pre COVID levels of marketing and, BEING AGGRESSIVE. SO WE HAVEN'T SEEN THE LANDSCAPE CHANGE. THOSE THAT GOT MORE AGGRESSIVE SEVERAL QUARTERS AGO HAVE STAYED AGGRESSIVE. THOSE THAT REMAIN DISCIPLINED HAVE STAYED DISCIPLINED. AND I EXPECT THAT WILL CONTINUE, YOU KNOW, AS WE THINK ABOUT 2022, WE EXPECT THAT WILL CONTINUE THROUGH 2022. AS WE THINK ABOUT OR AS WE LOOK AT, I SHOULD SAY, OUR MIDWEST AND SOUTH PROPERTIES, LARGELY THE SAME. THOSE PEOPLE THAT HAVE stuck to and remain disciplined with respect to marketing spend have generally stayed there. There are a number of properties in the Midwest and South, once again, that went back to pre-COVID levels of spend and have gotten very aggressive. They haven't changed. They're continuing to be aggressive. We monitor, we watch it, we try not to react to it, and we have remained disciplined throughout it. And once again, we expect through 2022 that those that are disciplined will stay that way and Those that have already gotten aggressive are going to stay aggressive. We don't expect a significant change in the promotional landscape, whether it be here in Nevada or outside of Nevada.

Perfect. Thanks so much, guys.

Sure.

Thank you, Mr. Jonas. The next question is from the line of David Katz with Jefferies. You may proceed.

Hi. Evening, everyone. Thanks for taking my questions. I appreciate all the color and information, but I wanted to just ask about updated boundaries around M&A. The company has had a history of being opportunistic in certain situations, and I'd love some color on whether corporate would be inbounds or out-of-bounds, opco-propco would be inbounds or out-of-bounds, or how you're thinking about all that in terms of a very attractive leverage profile at this point.

Yeah, I'll start and then obviously Keith can jump in. I think, you know, when we look about, when we think about M&A and OPCO, PROPCO, I think we do it in the context of the same way we have done historically. That is, we view owning real estate as important to the company. It gives us optionality with respect to flexibility down the road. should we ever feel like we need to execute on that. But as you mentioned, our balance sheet is significantly stronger today, and our cash flow generation capabilities are significantly stronger. So I'm not sure how that makes sense for us in the current environment. I think more broadly in terms of M&A, we're not going to do a deal just because we're lowly levered in generating free cash flow. It's still we will retain the same discipline that we have had throughout the history of the company, even though the company has a long history of making acquisitions. I think we believe we've been disciplined, strategic, and value-oriented in terms of pursuing those acquisitions, and that will not change. So I think just as we have a, what I would call a refined or or a transformed view of how we're executing our business. Same thing applies to our balance sheet, but it does not mean that we're changing our philosophy about how we're pursuing growth in terms of acquisitions. Steve, I don't know if there's anything you want to add to that.

No, I think Josh summarized it well. We've grown historically through M&A, and I think we've done a good job. As he said, we've been very disciplined and will remain disciplined. Any acquisitions need to be strategic and priced right, but... Other than that, Josh summarized it well.

Perfect. Thank you very much. Sure.

Thank you, Mr. Katz. The next question is from the line of Joe Greff with JP Morgan. You may proceed.

Hello, everyone. Maybe this is a question for you, Josh. Was there a big delta in property level EBITDA margins Um, at the end of the quarter versus how the quarter started, I guess, how to exit rates compare versus June, July levels. Um, and then when you think about Midwest and South, you know, excluding any kind of bad weather impact in Louisiana, Mississippi.

Yeah, not, not really. I would say that, uh, we were able to maintain our margins really throughout the quarter. we did have challenges with periods of softness kind of toward the middle of the quarter, and related to the factors you mentioned, primarily hurricanes, but also obviously the increased awareness around the Delta variant as well played a role in it. But our guys did a really good job of managing expense levels during those periods of time. We adjusted accordingly. So It wasn't like margins fell off the chart as a result of softness in revenues or anything of that during that period of time. I would rather say that the margins were fairly consistent throughout the entire, each month throughout the quarter.

Great. And I guess where are you in terms of the NOL balance and when do you start becoming a cash tax payer?

Yeah, so we still have an NOL balance left. It's one of the things I probably should have checked before this call that I typically do and just didn't do this time. But I think, you know, it'll most likely run out sometime in 2022, and obviously that depends on the performance of the properties and our company through next year. But we'll have an NOL balance, I expect, coming into year end.

Great. Thank you, guys.

Sure.

Thank you, Mr. Graff. The next question is from Daniela of Steve Wyzinski with Stifle. You may proceed.

Hey, guys. Good afternoon. So, Josh, I guess the next time you report, it's obviously going to be your year-end report. In the past, it would be a time where you gave us guidance for the upcoming year. And Who knows if you will or will not give guidance for next year? That's not really my question here. But, Josh, if you had to theoretically kind of give us a view of what the next 12 months would look like today, and I guess what I'm trying to get at here is maybe some high-level thoughts as to some of the potential headwinds or even tailwinds, if there are any, that you would be looking at if you were trying to model your business out today.

So you are asking for guidance for next year, right?

I knew that's where you were going to – no, just more kind of some high-level kind of thoughts maybe around whether it's margin pressures or opportunities, even on the revenue side. I mean, anything that you kind of give us from a high-level perspective that you might be kind of watching at this point.

So, Steve, I think as we think about 2022 and we think about the business – We tried to allude to this in our comments that we believe that there are still a number of revenue opportunities for us as we move into 2022. As the labor market recovers and we're able to rent all of our hotel rooms, as we're able to open up more of our amenities, if you will, we believe there's revenue opportunities. And as COVID restrictions begin to get lifted. As an example, walking into this meeting, I got a note that in Louisiana, they're lifting the mask mandate tomorrow. Here in Nevada, we still have a mask mandate, and hopefully by mid-November, that will run its course. But we think we still have the opportunity to grow the business kind of across the U.S. Out-of-town travel will continue to grow here in Nevada. Meeting convention business will continue to grow across the U.S., And so there are still, I think, very good revenue opportunities for us. Look, on the flip side, we will be adding back some labor as we talked about it. And we've talked over the prior quarters that, you know, over the course of time that some marketing will come back into the system. It's why we talk about maintaining much of the margin improvement we've seen, but not all of it, but much of it, because we know that there'll be some incremental expense flow into the business. The team today is doing a great job dealing with inflationary pressures, whether it be on cost of goods or other products or wage inflation. And we're not seeing it really have an impact on the margins because of the work the team's doing. So as we think about 22, we net-net see continued upside.

The one thing I would add to it, too, I think, is that underlies this thought process is that when we look at what's happened so far in 2021, You know, there's really only been one quarter that we would feel like had some outsized really tailwinds to it, and that was Q2. Underlying Q1, even Q3, and the performance of Q2 is, I think, a level of business that we think is sustainable based on the customer trends that we're seeing both among our be connected customers as well as our unrated customers. And so we expect those trends to underlie our business as we go into 2022 with the added benefits of what Keith mentioned and maybe a little pressure here or there, but not really outweighing the opportunities that we see for our business.

Okay, gotcha. That's perfect color. I appreciate all that. And then Second, real quick question, Josh or Keith, and maybe I missed this in your prepare remarks, but your older demographic in terms of your database, just trying to gauge what that demographic looked like during the quarter and if there was any material improvement from those folks.

Yeah, so that, you know, as we think about our 55-plus, 65-plus customer continue to grow in the third quarter, whether you look at visitation or trips or guest counts or theo, They all continue to grow in the quarter, so those customers continue to return to us in good numbers. We continue to see good results of them, especially through our core customer base and particularly at the high end.

Okay, great. Thanks, guys. Appreciate it.

You're welcome.

Thank you, Mr. Wisinski. The next question is from the line of Sean Kelly with Bank of America. You may proceed.

Hi, everyone. Good afternoon. Josh or Keith, maybe just to stick with the last area you were just talking about, the color you gave on the over 65 is super helpful. Have you seen any change in the unrated play behavior? I mean, it's obviously a profitable segment, one that we've asked about pretty much every quarter for the last five. But yeah, just any change on that pattern as the quarter progressed?

No, the short answer is no change. It's been remarkably consistent and stable since reopening last year. And so no change in trends during the quarter.

Great. And then just maybe as my follow-up, but to change directions a little bit, you know, Keith, I feel like in each one of these calls, you give us a little bit more on digital, you know, every kind of every quarter. And I'm just kind of curious if you could either remind us of what it would take to either increase your own direct kind of online casino presence through Stardust or or take back over some of the responsibility for that from FanDuel. I think you have that optionality, but I also know you sound more than pleased with your relationship. So if you could just talk about sort of where you want to take that maybe medium term in terms of your own control versus obviously having a very strong partner, that would be helpful.

Yeah, so I think in the longer term that we believe it is important that – You know, we control a little more of that as we move forward. And you're right. We have a great relationship with FanDuel. It's been a very profitable relationship and continues to work very well for us. We're able to leverage their technical expertise, not only from a software and product standpoint, but from a marketing standpoint as they understand the business very well. So we're learning. We're getting educated. And, you know, longer term, we will – take more control of that product. But in the short term, we're very pleased with how it's going and where we're at. So I don't think you'd expect to see any real change here in the short term.

Thank you very much.

Thank you, Mr. Kelly. The next question is from the line of Thomas Allen with Morgan Stanley. You may proceed.

Thanks. In your prepared remarks, Keith, you highlighted how you launched Boyd Sports in Nevada and you have the largest betting menu in the market. Can you just talk about how you put that together and the importance of that? Thank you.

So we've had an online sports product here for years, and we took the opportunity in working with our partners at FanDuel and with some upgraded technology who switched providers to to simply relaunch it as a much more, you know, having a much more fulsome betting menu. We've once again seen what FanDuel has been able to provide out of state, and so we took some learnings from that and leveraged off of them, and we're just able to have a better selection of not games, but of options than other people in the state. And it's just a learning from our partner.

That's helpful, Keller. And then just, this has been asked a few different ways. As you got into October, we're nearing the end of the month. Have revenue and demand trends been relatively consistent with what you saw in the third quarter? Have they slowed, accelerated? Thank you.

You cut out for a second there, Thomas. I think you were asking, are trends the same in October as we saw through Q3? Is that the question?

Exactly. Did they accelerate, decelerate? Are they the same? Thanks.

Yeah, I would say that, you know, as Josh mentioned, there was a little bit of softness kind of in mid Q3 with the Delta variant. But as we exited the quarter, the last several weeks of September, we're back to normal. And the trends we're seeing thus far in October are very much similar to what we saw at the end of Q3.

Helpful. Thank you.

You're welcome.

Sure.

Thank you, Mr. Allen. The next question is from the line of Dan Pulitzer with Wells Fargo. You may proceed.

Hey, good afternoon, everyone. Thanks for taking my questions. So I wanted to follow up on the increase in labor that you guys expect to bring back along with the rated player base. Given the margin expansion that you see in the local segment versus the Midwest and South, how should we think about you bringing back the non-gaming amenities and increasing your labor expenses?

Yeah, so Dan, thank you for the question. I think, you know, from the perspective of amenities, the way we think about it is our approach was perhaps different than some of our peers where we slowly reintegrated non-gaming amenities in particular and then started to expand hours and offerings in that way. I think other than hours, we've largely gotten to the place where our amenities are largely open. So labor on the F&B side, as I think about it, and Keith, obviously, jump in if you disagree, is more about finding people to fill open positions, which has been difficult. On the hotel side of things, it's about finding people to fill open positions as well to backfill kind of the level of employment that we want. But associated with that particular staffing will be, obviously, occupancy that's from known kind of gaming customers that we know their worth. So I think it's a little bit of filling open positions across the board, but as Keith mentioned earlier in response to an earlier question, it's generally associated with revenue, either expanding hours on the F&B side or hosting gaming customers that have some worth that we know that we can't serve today. So we feel like in each of these cases we'll be able to kind of staff and backfill where we need to, relieve some of the pressures in our existing workforce, and serve more customers and drive incremental revenue. Not so much just adding labor back that's an incremental expense without any kind of offset associated with it.

Got it. Thank you. A follow-up on your share repurchase, definitely nice to see. But I guess as you think through that, you think longer term, even with that share repurchase and exhausting the additional portion, you're going to be well below your historical target four to five times leverage range. So has there been a fundamental shift in that target range? And I guess how should we think about getting back there over time? What would be the key levers?

Yeah, so I think there has been a fundamental shift where pre-COVID, we were comfortable running the business in the four to five range. I think quite frankly, towards right before COVID, we were talking about being comfortable in the low fours and that's where we wanted to run the business. Today, we're at 2.75 times now and likely two and a half at the end of the year. We think that is the new range of for us. That is where we will continue to target over the long term running the company, obviously being flexible at any given quarter or any given year. But that is long term where we want to see the leverage for our company be in that kind of two and a half-ish range.

Got it. Then if I could just squeeze in one housekeeping question. CapEx for the quarter and any guidance for CapEx for next year?

Yeah, no guidance yet for CapEx for next year because we're kind of in the middle of that process. But, you know, for this year, we're still pretty much on track for about $200 million. We spent about $40 million in Q3.

Got it. Thanks so much, everyone.

Sure. Thank you, Mr. Pulitzer. There are no additional questions at this time. I will now pass it back to Josh Hershenberg for any further remarks.

Thank you, Tia, and thanks for everyone joining today. And if anyone has any follow-up questions, please feel free to reach out to the company, and we'll try to answer those questions for you. Everybody stay well. Thank you again.

That concludes today's conference call. Thank you, and have a great day.